Commodities Week Ahead: Lira Plunge Weighs On Gold; Iran Sanctions Pressure Oil
Gold bugs will battle to defend the yellow metal at the key $1,200 an ounce level this week as Turkey’s sanctions crisis diverts investors from commodities and other risk assets into the dollar. On the energy front, investors long on oil will hope the squeeze on Iranian supplies puts an end to crude’s worst losing streak in three years.
Elsewhere, grains prices are expected to turn volatile as more harvest damage from Europe’s drought squares off with the recent selling in wheat, soybeans and corn.
Turkey’s beleaguered lira should send more speculators toward the dollar, weighing on demand across commodities, forex dealers said.
At Friday’s settlement, US gold futures’ most actively-traded December futures settled at $1,211.10 a troy ounce, with Investing.com’s daily technicals maintaining a “Sell” call. While Fibonacci patterns indicate Level 3 support at $1217.17 today, many who’ve witnessed bullion’s decline from January highs of $1,357.20 believe gold bears will attempt new lows in the risk-averse environment created by the lira.
US Dollar Gains on Market Turmoil, Eyes Bond Sales and TIC Data
By Ilya Spivak
FUNDAMENTAL FORECAST FOR THE US DOLLAR: BULLISH
- US Dollar soars as emerging market turmoil stokes haven demand
- Bond auction results and TIC data may cap yields, cooling the rally
- Sentiment boost from US/Japan autos deal may not prove lasting
FTSE 100 Weekly Look Ahead: GBP and FTSE Correlation Breaking Down
By Justin McQueen
What has been evident in recent times is that when the Pound drops, the FTSE 100 typically moves in the opposite direction given that roughly 70% of the companies within the index generates revenue from overseas. As such, the fall in GBP tends to support dollar-earning multinational companies. However, the negative correlation has seemingly broken down with the Bank of England recently hiking rates while inflation continues to remain above the central banks 2% target. Consequently, the Pound and the FTSE 100 may move into positive correlation for the first time since December 2016, which would not spell good news for the FTSE 100 as the Pound falls to its lowest level against the greenback since July 2017.
Focus this week will be on the plethora of economics data points out of the UK, with the jobs report released on Tuesday, while inflation and retail sales are scheduled for Wednesday and Thursday. Much of the markets attention will be placed on the inflation print with risks potentially skewed to the upside given the fall in the Pound, potentially providing a boost to inflation, resulting in a firmer Sterling.
NZD/USD Drop May Gain on Brexit, Turkish Financial Exposure Fears
By Daniel Dubrovsky
NEW ZEALAND DOLLAR FUNDAMENTAL FORECAST: BEARISH
- Dovish RBNZ and concerns over European bank exposure to Turkey sent NZD/USD lower
- Local economic event risk for the New Zealand Dollar sparse, placing focus on sentiment
- Brexit and lingering Turkish fears can weaken stocks. USD may also act as a safe haven
- AUD/NZD may act as “risk neutral”, rising on better-than-expected Australian jobs data
Nikkei drops almost 2% as Asian shares slide amid investor worries over Turkey
By Cheang Ming
- Asian shares slid on Monday as investor sentiment wobbled amid a renewed decline in the Turkish lira.
- The Turkish lira touched a fresh all-time low, but pared some losses after moves were taken to bolster the currency.
- The safe-haven yen firmed amid the uncertainty.
Goldman Sachs downgrades Intel shares to sell due to its chip ‘manufacturing issues’
By Tae Kim
Intel’s chip manufacturing technology issues are a big problem, according to Goldman Sachs.
The firm lowered its rating to sell from neutral for Intel shares, citing its repeated delays in moving to its next generation chip process technology.
“We see Intel’s struggles with 10nm process technology having ramifications in terms of its competitive position – across a broad set of products,” analyst Toshiya Hari says.
Hari lowered his price target for Intel shares to $44 from $49, representing 12 percent downside to Thursday’s close.
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